Class action suit filed against Biolase

BioPhotonicsOct 2013
A class action lawsuit filed in August on behalf of shareholders against Biolase Inc. alleges that the dental laser maker made materially false and misleading statements regarding its business and operations.

The complaint alleges that the biomedical company and some of its officers failed to disclose near-term solvency issues, severe liquidity problems, and weaker-than-reported sales from the class period of Nov. 5, 2012, to Aug. 7, 2013, resulting in false and misleading financial statements.

The lawsuit is on behalf of all persons or entities that purchased or acquired securities of Biolase during the class period and seeks to recover damages against the company as a result of the alleged federal securities law violations. The plaintiffs are being represented by Pomerantz Grossman Hufford Dahlstrom & Gross LLP of New York City.

On Aug. 9, Biolase’s quarterly report announced that the company was in breach of its financial covenants related to lines of credit. Biolase shares declined $1.61 per share, more than 47 percent, to close at $1.81 per share on Aug. 13.

On Aug. 14, an analyst report was published on SeekingAlpha.com criticizing the company for misleading investors regarding the extent of its alleged solvency problems, false sales guidance and product adoption. Biolase shares closed at $1.20 per share on Aug. 14, with a 33 percent decline of 61 cents per share.